Today, Demand Media beat Wall Street expectations in its second-quarter earning, growing revenue and lessening losses.

The Santa Monica, Calif., online content maker also announced that it had re-upped and expanded its advertising partnership with Google and also bought two start-ups in social media and advertising.

Now, it’s time for the inevitable conference call to explain it all to Wall Street analysts and the media.

2:02 pm PT: The call starts off with an unusually jaunty CEO Richard Rosenblatt, who quickly got to the real deal: Exactly how badly did Google’s changes to its search algorithm, under a program code-named Panda, hurt Demand’s content business?

Not much, says Rosenblatt, who reels off a list of things the company has done to improve its offerings, which have been dinged by many as, well, spam.

Rosenblatt was not having any of that, talking about removing 300,000 pieces of crappy content and also “quality improvements” with partners such as cheerily demented cooking goddess Rachael Ray. She might cook with spam — here is a delightful Spam Hawaiian recipe — but she ain’t spam!

2:13 pm: Now it is on to the acquisition of IndieClick. Essentially: It’s for the young people.

Then, international. Latin America Demand editorial via eHow en español! (Actually, the acquisition of Emergincast.com, an Argentine start-up. Coming soon to a blog site near you: ¿Cómo se hierve el agua?

Last, social media. Demand will be doing a lot more of it, like everyone else in the world, including more recommendations. I would really like it if some Internet company said it was going anti-social.

2:18 pm: The finance guy comes on, covering everything already in the press releases. Which is why I am cutting out here and getting a gluten-free doughnut at the Whole Foods store where I am writing this post.

It is as delicious as you might imagine a gluten-free doughnut can be. Which is to say: Not very!

2:32 pm: Q&A time from the Wall Street dudes — and, let it be said, they are all dudes.

The first question is about the “cleansing” of its cruddy content and if it is all flushed out.

It might be baked-on sludge, but Rosenblatt assures that Demand has it all figured out.

Then, a query about international and how the company decides what to pick. Algo, of course! And local content writers.

Back to the spam content: Does the need to have better content mean less of it? Kind of, since there is a lot more video. But still a lot of content churning out of Demand!

A question about Facebook and how to program Demand content into it. Good lord, it’s hyper-poking!

“It’s not clear the best way of how you expand into all these properties,” said Rosenblatt, specifically referring to its acquisition today of both IndieClick and RSS Graffiti.

The next question is how successful Demand is in the display and brand business, and how IndieClick, a premium ad company aimed at niche blogs, will be integrated in.

More on social media advertising’s future. Aaaghh, this is as obvious as a store-bought-crust apple pie baked by Rachael Ray.

Rosenblatt notes that its flagship site, eHow, is but one means of distribution, but Demand content is going all over the place and winging by people when they least expect it.

“Social is more effective … to try to find stuff you didn’t know that you needed,” says Rosenblatt, who also would not dis search as a means of discovery.

That’s important, since Google is a major traffic driver and advertising partner, when it is not terrorizing Demand and others with its search algo version of Defence Against the Dark Arts Professor Snape.

And presto, here comes a question about Demand’s Google ad relationship, which Rosenblatt touts nicely.

Of course he does. It’s tastier than spam, after all.

Demand also said it had acquired Los Angeles-based IndieClick, a premium online advertising company and RSS Graffiti, a social media company.

The company also said that it struck a three-year “renewal and expansion of its ongoing advertising partnership with Google to monetize Demand Media’s owned and operated properties and premium content inventory.”

Revenues rose to $79.5 million in the quarter compared to $60.4 million a year ago. Analysts had expected $73.9 million.

Net loss per share on a GAAP basis was three cents, or $2.4 million, compared with a 75 cent loss, or $1.9 million, in the same period last year.

On a non-GAAP basis, which Demand’s investors also take into consideration, revenue minus traffic acquisition costs increased 34 percent to $76.6 million from $57.3 million last year.

Adjusted net income per share, diluted of six cents, grew 50 percent, compared with four cents a year ago.

About IndieClick, which Demand said would help monetize its audience on the Cracked humor site, the company noted in a press release:

“IndieClick represents a curated portfolio of important online destinations in the comedy/humor, entertainment, film, music, lifestyle, and fashion categories that are especially relevant to enthusiasts, with a focus on the 18-34 year-old demographic.”

As for re-upping its longtime advertising deal with Google, Demand said that it would extend its display advertising and premium ad serving arrangements and that its properties “will be included in premium, brand-safe channels within Google Display Network Reserve.”

I will be liveblogging Demand’s earnings at 2 pm PT.

Until then, please peruse all the various press releases from Demand:

2Q11 Results Release FINAL 08 09 11 –

Goog_DMD Release_FINAL 8 9 2011 –

IndieClick Release_FINAL2 – 8 9 2011 –

DM_Acquires_RSS_Graffiti – final clean _2_ –

After the markets close tomorrow, Demand Media will report its second-quarter earnings.

Wall Street is expecting a solid performance from the Santa Monica, Calif.-based online content maker compared to last year.

The consensus of estimates by analysts is for Demand to lose one cent a share, which is much smaller than the 55 cents a share loss from the same period a year ago. It is also an improvement on a previous loss of five cents a share for this quarter that investors had been predicting.

Nonetheless, the company’s stock hit its all-time low yesterday, after a strong IPO in January. Since the summer, it’s been all downhill, with Demand shares off 50.4 percent since early May.

Since it went public, the stock is off 63.1 percent.

Some important metrics to pay attention to:
24.59 million U.S. subscribers, plus another 1 million in Canada. That’s in line with exepectations.
Projected subscribers in Q3: Up to 27 million, which is a little lighter than analysts were looking for.

Q3 revenue guidance: Up to $828 million, which will again disappoint Wall Street.
Q3 EPS guidance: From $0.72 to $1.07 per share, also lower than expectations.

Not surprisingly, shares are down initially, dropping more than 7 percent after hours.

Reed Hastings seems to indicate that some of the shortfall is because of its recent price hike, which is meant to push subscribers away from DVD rentals and toward streaming: “Because of the timing of the price change, revenues will only grow slightly on a sequential basis”.

Hastings does say that he won’t completely abandon DVDs, though, noting that he’ll start marketing the DVD-only service in the last three months of the year, “something we haven’t done for many quarters.” By the end of Q3, he says, Netflix will have 10 million streaming-only customers in the U.S., 3 million DVD-only customers, and another 12 million who will get both formats.

Netflix has pushed up the operating losses it expects to incur from international expansion this year from $70 million to $80 million; that’s the second time the company has bumped that number up.

Netflix also says it is not bidding on Hulu, but that’s no surprise.

As always, here’s Citigroup analyst Mark Mahaney’s “cheat sheet” so you can play along at home. Pay particular attention to subscription growth projections (click chart to enlarge).

The Netflix earnings call starts at 6pm eastern; I’ll be back then to listen in and will update if needed.

Here are the slides Yahoo released about its second quarter earnings, in which revenue was down due to an unexpected drop in growth in its display advertising business, especially in the critical U.S. market.

As you can see on Page 8 of the deck, year-over-year display sales rose only five percent in the quarter, compared to much more significant increases in previous quarters. With declines in all other revenue sectors, this was not a good thing.

The 10 percent decline in the Americas region, which you can see on Page 9, is the culprit, as Yahoo CEO Carol Bartz underlined in the conference call with Wall Street analysts today.

Paging Ross Levinsohn — leader of Yahoo’s Americas region and its ad efforts — stat!

YHOO_Q2_11EarningsPresentation_Final

Yahoo turned in another weak performance in the second quarter, with yet another decline in revenue.

This time it was five percent, compared to last quarter’s six percent. In other words, at least things are looking up as they go down!

While earnings per share rose smartly, Wall Street is still looking for strong sales growth from the Silicon Valley Internet giant, which seems unable to provide it.

Blamed most this time for the revenue fall: Yahoo’s changes in its display sales operations in the key Americas region, reasons for which were largely unspecified in the initial company press release. (You can see the damage in this slide deck from the company here.)

Maybe Yahoo CEO Carol Bartz will explain it all in its upcoming conference call with analysts (or she could try the I-don’t-know approach taken by News Corp. CEO Rupert Murdoch in PhoneGate hearings in Britain earlier today!).

2 pm PT: It starts with the usual regulatory blah-blah, which I always enjoy.

Bartz gets right into it, opening with the key problems with China’s Alibaba Group, as well as its display and search revenue weaknesses.

The fight with Alibaba is over its Alipay payments unit, which was spun out of the Chinese company without Yahoo’s say-so. Yahoo is a big shareholder.

Bartz says that the company was working on a settlement night and day.

But she quickly gets onto how display did not perform as expected in its key Americas arena. “Obviously, I am not happy,” she said.

Obvi! Neither are shareholders, Carol.

She says it was not about new competitive development. It was not about the economy. It was not about engagement.

So what was it? Changes in its sales leadership and organization, says Bartz, which has included talent walking out the door in droves.

A lot more than Yahoo expected, but no surprise to anyone who has been paying any attention to the brain drain at the company.

Bartz promises a new approach to sales, part of its endless turnaround, which is beginning to feel like a digital version of “Waiting for Godot.”

Search revenue, though, says Bartz, was better than expected.

2:11 pm: CFO Tim Morse is on now, running through the numbers and the display shortfall in the Americas region.

“We simply did not have appropriate coverage,” says Morse, noting consumer products, tech and autos as weak spots in the advertising market.

Thank goodness, then, for the guarantees from search revenue in the Microsoft partnership deal.

More numbers and then it is back to Bartz to talk about search, which is going better than the last quarter, when it was the culprit for the revenue decline.

She says that Microsoft and Yahoo were working together to improve the issues.

“We’d like to be further down the road,” says Bartz about the goal of search revenue per search growth, as well as settling all the other problems, such as the Asian issues.

And, by further, I am presuming she means actual forward movement, which is what roads are actually for.

2:27 pm: Q&A time, the part of our program where Wall Street analysts do not ask the questions that need asking (and where I win fancy journalism awards for pointing this delta out!).

Therefore, Bartz is first thanked for providing “color” about the display disaster and is not asked about more specifics of the disaster itself.

The second question still does not get to it either, but she does note Yahoo’s sales force has to sell beyond “Gee, we’re big” and come up with better ad solutions.

“The issue is we did not have enough sales people in front of the big clients,” says Bartz.

That’s because all those former Yahoos are now working at Groupon, LivingSocial, Facebook and on down the line and now in front of big clients for those hotter companies.

2:34 pm: Question about its Asian assets. Yahoo’s talks with Yahoo! Japan and Alibaba are separate, says Bartz, although I would add that they have non-movement in common.

And also a question about Yahoo’s interest in the acquisition of the Hulu premium online video service.

Bartz winks verbally and says nothing, which translates into: Of course, it is interested.

More on the reasons for the display fall-off, which Bartz makes clear is not due to big competitive threats, but internal issues.

Maybe she’s saving big competitive threats as the reason for a revenue decline in the third quarter!

I look forward to the quarter I get the finger pointed at me for causing revenue to fall, due to my snarky posts.

Now, we are into softball questions about improvements in engagement. It’s up, but no one asks why Yahoo is still not doing anything very cutting edge in product innovation compared to competitors.

I believe Google has launched at least 14 new social networks since this Sunday, along with its strong quarterly performance last week. And Apple, well, blew away its quarter today as it is about to release more cool new stuff later this week.

And that might be the crux of the issue for Yahoo, which might not solve its woes by throwing a more focused sales army at the issue.

That’s because Yahoo’s products are simply not nearly has social as Facebook or even Google right now, which might be the true problem as old customers move on to new advertising solutions.

Whatever the reason, Yahoo clearly needs a refresh of its ad products and how it sells them, especially in its fast-growing mobile, video and communications products.

Bartz talks about getting better expertise, a tighter regional focus and other issues of going to market, which is perhaps something she might have realized many, many quarters ago.

After all, she’s been in charge for a while, and these issues are not new.

In fact, in an earlier quarter, Bartz was stressing “tentpole” events and anchor media properties and the power of the size of Yahoo as a selling point.

This was in April, in fact, in the first quarter of this year.

As I wrote then:

“CEO Carol Bartz excited was the Silicon Valley Internet giant’s traffic gusher for big tentpole events such as the Super Bowl and the Oscars. In fact, Bartz practically sounded like a gushy “Entertainment Tonight” flunky when talking to Wall Street analysts about Yahoo’s Oscar news, games and other offerings. She proudly noted the site’s efforts generated more than a billion pages views.”

Now big is out! Moving on!

The last question is another about Yahoo’s talks with its Asian partners.

“It’s complex,” says Bartz.

You can say that again.

Yahoo turned in another flat performance in the second quarter, with $1.08 billion in revenue, which was slightly below Wall Street expectations.

Earnings per share were right on target, though, at 18 cents each, an increase of 18 percent. Net income was $237 million for the quarter.

Investors were expecting Yahoo to report revenue of $1.11 billion on earnings of 18 cents.

That means a revenue decline of five percent from a year ago, which Yahoo said was “primarily due to the revenue share related to the Search Agreement with Microsoft.”

More importantly, in a statement, Yahoo CEO Carol Bartz also pointed to changes in its display sales operations, a key business of Yahoo:

“We experienced softness in display revenue in the second half of the quarter due to comprehensive changes we have made in our sales organization to position ourselves for more rapid display growth in the future.”

Whatever the reason, it’s not good news for Yahoo, especially considering Google’s strong results last week. Then again, it’s better than the first quarter’s six percent drop in revenue for Yahoo.

That said, Yahoo stock was down between one and two percent in after-hours trading.

Here’s the full press release to peruse, before I begin liveblogging the earnings call at 2 pm PT, as well as a link to my post on its slide deck of the results:

YHOO_Q211PressRelease_Final

Sales were $8.6 billion, helped mostly by new software license sales that grew 21 percent to $2 billion, while updates and product support revenue grew 12 percent to $3.7 billion. The consensus estimate was $8.34 billion. Sales grew 47 percent from the same period a year ago.

Non-GAAP per-share earnings were 51 cents, beating the 46-cent forecast estimate of analysts surveyed by Thomson Financial. Earnings after one-time items were 37 cents, up from 29 cents a year ago.

Gross margins on Sun-branded hardware increased to 53 percent.

Shares are up almost 4 percent in after-hours trading.

There’s a quote from CEO Larry Ellison, reminding us how fast his new products are, and digging once again at the competition:

“Sun’s new SPARC Supercluster computer shattered the world record for database transaction processing performance by running 3 times faster than IBM’s fastest computer, and a stunning 7.5 times faster than HP’s best ever database performance,” said Oracle CEO, Larry Ellison. “Our new generation of Exadata, Exalogic and SPARC Supercluster computers deliver much better performance and much lower cost than the fastest machines from IBM and HP.”

Here’s another quote, from Oracle co-President (and former HP CEO) Mark Hurd, about the Exadata product line:

“Since joining Oracle I’ve met with and visited many customers that have expressed a high level of enthusiasm around our strategy of engineering hardware and software that works together,” said Oracle President, Mark Hurd. “That enthusiasm translates into an Exadata pipeline that has now grown to nearly $2 billion. That number is a good leading indicator that customers are planning to increase their investment in Oracle technology.”

Yes I would say there’s enthusiasm. It was precisely because of the Exadata line that Macquarie Research upgraded Oracle today.

More from the conference call, which starts at 5 pm ET.

4:53 pm: Seven minutes to go before the Oracle earnings conference call starts. Right now it’s all mellow classical guitar.

Call is running a little late.

5:10 pm: And we’re underway with the safe-harbor statement.

Ellison, Hurd and president Safra Catz are on the call.

Americas grew 32 percent in U.S. dollars.

5:15 pm: Balance sheet: $24.8 billion in cash and short-term investments.

Generated $3.7 billion in free cash flow.

5:15 pm: Safra Catz is now speaking. We exceeded the high point of license guidance. Even excluding a payment for legal fees, we beat guidance by 4 cents.

5:16 pm: All geographies reported double-digit growth.

5:16 pm: “We continue to take share from SAP.”

5:17 pm: With Sun, included operating margins were 44 percent, which is better than SAP. [Another dig.]

5:18 pm: Hardware guidance: $1.1 to $1.2 billion in revenues.

Non-GAAP EPS expected to be 48 to 50 cents, and 34 to 36 cents on a GAAP basis.

Here’s Larry:

5:19 pm: Our goal is to be No. 1 in high-end market for servers. Right now our numbers are behind HP and IBM.

5:20 pm: IBM’s and HP’s servers are slow, and software is slow and expensive and have no software value-add. [Another dig at the competitors.]

5:22 pm: Exadata pipeline continus to grow. We expect our new generation of Sun machines will enable us to win significant share, and position us in the No. 2 position behind IBM very soon. And then we’ll fight it out for No. 1.

5:23 pm: Now Mark Hurd is speaking.

5:23 pm: I want to focus on our opportunities to grow significantly.

5:24 pm: Deal volume was spread across companies of all sizes and strength in the public sector as well.

5:24 pm: All of our customers and competitors are reacting to us.

5:25 pm: 150,000 Middleware customers. We ended the quarter with a record hardware backlog.

5:26 pm: Now going to Q&A:

A question from UBS. Are you starting to see a halo impact on adoption of the Oracle suite?

Larry: Close rates are improving. You’ll see great improvement in Exadata sales from Q2 to Q3. Because it’s new, people were running a lot of benchmarks and trying it out first. We’ll sell a lot more Exadata in Q3 than in Q2.

As for the halo effect, when you buy these servers you buy them to run specific software. Engineer them at the same time and make sure they run well together. We have a huge advantage over IBM and HP. The notion of systems, hardware and software that run well together will dominate the high end of the business.

Q: You clearly have a lot of irons in the fire with Fusion apps coming up and Exadata. Focus on Exalogic. Can you share early feedback from customers and compare that to Exadata ramp.

Mark: Exadata experience benefits Exalogic. We’ve matured the use case, we think we know where the targets are. The Exadata experience is a big deal for us.

5:31 pm: A question about Fusion Middleware.

Larry: We’ve been in the middleware business for a long time. With release 11 everything has been rewritten. It’s a much better user experience, you can patch our entire suite with a single file. We think the fact that we have an integrated suite gives us a huge advantage over IBM.

5:33 pm: A question about Europe. It was better than expected. Apps business was really strong. Look at competitors. You’ve been gaining share against SAP. We are seeing a pickup in general environment.

Hurd: I’m not an economist, but we’re doing well in Europe. It was broad-based. It was not singular to a deal or country. It was broad-based to countries where we have been gaining share. It’s been one quarter after another, a pretty steady beat.

Larry: We had a wonderful set of industry specific applications, in telecommunications and banking and retail, and that’s unique vis-a-vis SAP. that has helped us a lot to establish us in a lot of industries. Also Fusion is right around the corner.

5:35 pm: Q: How frequently is an Exadata deployment resulting in the displacement of a competitor’s product?

Hurd: About 70 to 75 percent of the time. About 20 to 25 percent of the time it’s a consolidation.

We’ve sold Exadata now in 50 countries, and 30 to 35 percent of our customers have made a second purchase. You’re starting to see repeat purchases. We’ve learned a lot about this and so as we launch Exalogic we can accelerate our learnings.

5:36 pm: Q: Margin was also great. What can we expect going forward and what were one-time items?

Catz: In general, it’s the business. The only nonrepeatable thing is the $120 million legal settlement, which we will not repeat. Hardware margins and operating margins, this is something we’ve done for many years.

5:38 pm: Q: What is visibility for database licenses?

Larry: A couple quarters ago, someone noticed database licenses were growing nicely. We think Exadata is going to be a nice turbocharge to our database business. Across the board our database business is going to get strong with Exadata.

I just looked at after-hours trading in Oracle shares and they’re up more than 4.5 percent.

Hurd: “The secret to Exadata is bringing the smarts to the data, versus bringing the data to the smarts.”

5:42 pm: Q: What continues to drive the database business? Is it just core database, add-ons?

Larry: We think our technology is getting faster and more reliable at a faster rate than that of our competitors.

5:43 pm Larry: As far as applications, we think there are lots of reasons we continue to gain share every quarter over the last few years over SAP.

It’s the industry-specific applications. We have telecom companies that are running only Oracle software. We have some banks that are making the same kind of commitments up and down the stack. SAP just doesn’t have that.

5:44 pm: Larry: We’ve got this extremely modern Java-based suite called Fusion that is going to strengthen our competitive stance against Salesforce.com and against Workday.

5:46 pm: That seems to be it. The call is concluded.

In both cases, that lurch on the right hand side shows you how unpleasant things got post-Lehman, and the subsequent recovery shows that we’re getting close to where we were back in 2008. So that’s good.

The only problem with the data is that it only goes through this summer, and we’re just about to get a new set of Q3 numbers, starting with Google’s (GOOG) on Thursday. So best to check back then to get an updated sense of how things really stand.

Universal Music Group just reported a sales increase of 2.8 percent in the last quarter. But if you adjust for currency fluctuations, the company, owned by France’s Vivendi conglomerate, saw sales drop 3 percent. Meanwhile, cash flow, measured via EBITDA, dropped no matter which metric you want to use –either by 9.9 percent or 17.3 percent.

The slightly good news is that Q2 was less bad for Universal than Q1: For the first half of the year, sales were down 5.4 percent (or 7.9 percent) and EBITDA declined by 24.6 percent (or 28 percent).

What happened? The same thing we’ve heard for the last decade, according to Vivendi’s press release: Digital revenues are up, but not enough to counter “reduced demand for physical product.” Perhaps an iTunes overhaul can help….

• TWX reported revenue of $6.38B, vs. our estimate of $6.06B, up 7.7% Y/Y. Adjusted operating income of $1.20B was $90M better than our estimate. We note that the beat came from cable networks, which we see as higher quality than film.
• Filmed Entertainment revenue was $2.52B, ahead of our estimate of $2.26B, up 7.8% Y/Y. Segment operating income was $173M, while we estimated $171M.
• Cable Networks revenue was $3.17B, and Adjusted Operating Income was $981M, while we estimated at $931M.
• Publishing revenue came in at $919M, in line with our estimate, up 0.4% Y/Y. Segment Adjusted Operating Income was $153M, vs. our est. of $142M.
• Reported diluted EPS ex-items of $0.50, vs. our estimate of $0.44.
• On the call we will be looking for commentary on the advertising market recovery and cable networks cost trends as well as for an update on capital allocation.

Operating income could be a problem, though: Factoring out foreign exchange swings and a one-time charge, Amazon delivered pro forma operating income of $240 million, and Wall Street was looking for something like $260 million.

As Henry Blodget points out, Amazon’s North America media sales (books, CDs, DVDs, etc.) have flat-lined in the last year. This is what that looks like in graph form (click to enlarge):

Now listening to the stultifying earnings call, which does not feature Jeff Bezos. Assuming there’ll be questions about the Zappos deal; I also assume that Amazon (AMZN) won’t have much to say about it beyond the announcement it put out yesterday. But I’ll add in any highlights below.

Q. Mary Meeker wants to know if Amazon is seeing a slowdown in media sales due to the transition to digital. She’s also interested in the possibility that mobile could be a big deal.

A. Media is slow, but it doesn’t seem to be related to digital. Still very early, and Amazon is seeing good unit growth there (Kindle, MP3 store, movie service). Not much to say about mobile.

Q. Any plans to take Kindle overseas?

A. Nonanswer.

Net income in eBay’s second quarter, ended June 30, fell 29 percent to $327 million, or 25 cents a share, from $460 million, or 35 cents a share from a year earlier. Revenue fell four percent to $2.1 billion.

The results came in at the high end of the Q2 outlook eBay provided back in April when the company said it expected revenue of between $1.85 billion and $2.05 billion and earnings per share of between 23 cents and 26 cents.

“We drove solid second quarter results, with strong momentum and market share gains at PayPal and continued stabilization in our core eBay business,” eBay CEO John Donahoe in a statement. “I’m pleased with our pace, our progress and our performance.”

Can’t be much pleased with the company’s core online-auction business, though. That continues to show weakness. The amount of goods and services flowing through eBay’s (EBAY) marketplace, called “gross merchandise volume,” fell 10 percent year-over-year to $11.1 billion. And that’s not good. Especially when Amazon.com (AMZN) is gaining market share so quickly.

“The core eBay marketplaces business continues to be the most important driver for eBay’s share price,” Heath Terry of FBR Capital Markets said in a note to clients this week. “While the company is making progress, management still has a long way to go in addressing the years of technological neglect at the company.”

Top line for Google’s Q2 earnings: Net revenue of $4.07 billion and earnings of $5.36. The Street was looking for net revenue of $4.05 billion and earnings of $5.05.

CEO Eric Schmidt isn’t overly effusive: “Google had a very good quarter, especially given the continued macro-economic downturn. While most of the world’s largest economies shrank, Google’s year-over-year revenues were up 3%. These results highlight the enduring strength of our business model and our responsible efforts to manage expenses in a way that puts us in a good position for the economic upturn, when it occurs.”

Meanwhile paid-click growth was up 15 percent, and the company continues to clamp down on expenses: Google’s headcount actually shrank in the last three months, from 20,164 to 19,786 full-time employees.

I’ll be listening in on the call and occasionally updating here.

• Schmidt: “Youtube is now on a trajectory we’re very pleased with.”
• “Too early to tell when the recovery will materialize.”
• CFO Patrick Pichette: Still hiring, but decrease in headcount came from previously announced layoffs.
• Product SVP Jonathan Rosenberg: We’re focusing more than ever on power users.
• Mobile monetization picked up, driven by smart phones. YouTube’s monetized views have tripled in the last year.
• Sales boss Nikesh Arora: Small advertisers have stayed consistent during downturn, and larger advertisers who have been on sidelines are coming back.
• Schmidt on Chrome OS: We’re talking to manufacturers about designing “products that are very, very exciting.” Will Chrome run on existing hardware? Available for download? Still to be worked out.
• Was June soft? Schmidt: We generally don’t parse interquarter trends. On YouTube: Monetizing “billions of views” per months. [Nothing approaching real numbers or real context].
• Arora: “Significant sellthrough” in markets where Google has YouTube homepage for sale. Next phase of YouTube sales emphasis will be preroll ads on short-form videos.
• Arora on YouTube “trajectory” comment: We’re excited about getting pieces in place to drive this forward [i.e., not talking about numbers]. Customers accepting YouTube ads: “It’s becoming accepted user behavior where they’re going to watch premium content that people have invested in, they’re going to watch pre-roll ads.”
• Is YouTube profitable? Pichette: We don’t give out economics. But in the not-too-distant future, we see it being very profitable.

Here again, per Citigroup’s Mark Mahaney, is a crib sheet for interpreting the results (click to enlarge):

And here are the slides from Google’s investor presentation:

2009Q2_google_earnings_slides –

BoomTown was a squeaky enough wheel to get Yahoo CEO Jerry Yang to grant a long interview by phone yesterday–just a day after he had announced weak third-quarter earnings results for the Internet giant, caught as others are in the econalypse, as well as layoffs of at least 10 percent of its global workforce.

But instead of being glum, as you might expect, especially after a year of corporate turmoil that would have finally gotten to even Job–let’s review: management upheaval, a Microsoft (MSFT) takeover battle, an attack by billionaire activist Carl Icahn, tangling with the Justice Department over a pending Google (GOOG) search advertising partnership and more!–Yang sounded surprisingly confident that Yahoo (YHOO) would emerge a winner after all the wrenching change is wrought at the company he co-founded.

I split the interview into two parts. The second will appear later today at 4 p.m. Pacific time, talking about Icahn, the Google deal, Microsoft and why Yang thinks he is the right leader for Yahoo, so check back.

Here is the first part, in which he talks about Yahoo’s financial performance and the impact of the bad economy on Yahoo’s dominant display advertising business and gives more details of the layoffs and cost cuts.

BT: How do you look at the last quarter?:

Yang: What we said was that the quarter showed some strength in U.S. search and performance display, but more weakness in branded, especially at the end in the U.S., and more so internationally. The U.S. started softening in Q2 and that continued into Q3. International was hit much harder, although display still grew double-digits there in Q3. Softness started in the U.K. early, and we knew when the French came back from vacation in September and did not buy ads at the same levels that those were trends we had to watch.

Asia was more of a surprise, but the same trends were happening there too. Because we have such a big market share there, we are looking to every country for what is coming next.

BT: And what is your Q4 outlook?:

Yang: Like everyone else, we are pretty much forced to formulate our views in an unprecedented set of circumstances because things are changing so quickly and the world looks a lot different than just three or four weeks ago.

Of course, I can’t imagine advertisers are going to say we’re going to juice up spending soon, and so we’re assuming a lengthy period of weakness. I don’t think anyone is going to be immune, even though search performance ads are probably more able to withstand a downturn in spending. What was good for us was that our search and our performance display businesses were both up in the quarter.

BT: Any more details about the layoffs and other cuts?:

Yang: We want to do it before the holidays, which is why we wanted to let people know that it would affect 10 percent [of Yahoo's work force]. But we also want to make sure that we are cutting to be more effective and not cutting for cutting’s sake.

We’re asking ourselves–should we sell it or should we shut it down? That is the kind of comprehensive look we are doing across the company.